John Edwards: The Lawsuit Industry Puts Its Best Face Forward

A look at John Edwards's legal career provides a window into the flaws of the legal system that made this mill worker's son a multimillionaire.

Sen. John Edwards of North Carolina, the charismatic personal-injury lawyer who would be president—or, perhaps, vice president —has done wonders for the image of the lawsuit industry. In more than a decade as his state's most talented trial lawyer, Edwards won an estimated $150 million in jury awards and settlements for powerless people who had been horribly injured by reckless and negligent (and, perhaps, not so negligent) corporations and doctors. He cared passionately for his clients, believed deeply in his cases, and was apparently untainted by the ethical sleaze exhibited by some of the lawyers who have so lavishly financed his campaign. And his extraordinary ability to connect with ordinary Americans works magic on the campaign trail as well as in the courtroom.

Edwards's autobiography, Four Trials, shows the tort system at its best, serving the indispensable functions of compensating injured victims and deterring dangerous conduct. But that's not all the book shows. And a preliminary look at Edwards's legal career provides a window into the faux-populist pretenses and other flaws of the system that made this millworker's son into a multimillionaire.

One of the book's four trials grew out of a heartbreaking accident in which a 4-year-old boy was orphaned when a tractor-trailer killed both of his parents. The truck driver, who had jackknifed across the double yellow line into the path of the parents' car after skidding to avoid rear-ending another car, pleaded guilty to reckless driving. Edwards, hired by the orphaned boy's grandmother, sued the driver's employer, a large textile company, and won a jury award of $2.5 million in compensatory damages plus $4 million in punitive damages. Assuming that Edwards (whose book never mentions his fees) took the standard contingent fee of about 33 percent— or more than $2 million—the award would cover the cost of the boy's upbringing and leave him a millionaire three or four times over.

The compensatory award's generosity seems appropriate, in light of the boy's incalculable emotional loss and the need to deter unsafe driving. But why the $4 million in punitive damages? It was not to punish the driver, Edwards explains: The grandmother thought he "seemed like a decent man, and she believed his remorse was genuine." Rather, Edwards persuaded the jury to punish the employer for paying its drivers according to "how many miles [they] covered," and thus to send a message to the trucking industry to sin no more. Paying drivers by the mile, Edwards argued, encourages them to be reckless and stay behind the wheel too long.

But nowhere in the book's 27-page discussion of this case does Edwards claim that this driver was violating the speed limit, or working more than the 12-hour shift allowed by law, or tired. Nowhere does he suggest that paying drivers by the mile was unusual in the trucking industry. Nowhere does he cite evidence that the driver decided to drive recklessly that day —after 27 years on the job—because he was paid by the mile. Nor does the book cite evidence that drivers paid by the mile are generally more reckless than those paid by the hour—who are, after all, often in a hurry to get home.

I happened to read this chapter while riding in the back of a metered taxicab on Interstate 95. The cabbie was paid by the mile, as are most cabbies. Does this make them reckless? Not that I've heard. Like truck drivers, they know that reckless driving can get them ticketed, arrested, smashed up, or even killed. And if we, as a society, want truckers to drive more slowly—which would increase the cost to consumers of moving cargo—the way to do it is to adopt and enforce lower speed limits.

It may have been emotionally satisfying for this jury to "punish" the "half-billion-dollar corporation" fingered by Edwards as the villain. But unless Edwards left his best evidence out of the book, there was no villain, except perhaps the driver. And while some cases really do have villains, damage awards against their companies rarely punish them. It is virtually unheard of for executives to be fired or demoted because of such awards. And the costs, initially paid by insurance companies and innocent stockholders, typically end up being spread across America in the form of higher insurance premiums and prices.

In short, the $4 million punitive award of which Edwards is so proud ultimately came out of the pockets of the same ordinary, hardworking Americans whose champion he purports to be—and a big chunk of it went into the pockets of John Edwards.

Four Trials also discusses the first of Edwards's many lawsuits against obstetricians and hospitals on behalf of babies born with cerebral palsy—perhaps his most lucrative specialty. But the book does not mention the growing medical consensus that in the overwhelming majority of cases, this severe form of brain damage is not the fault of botched deliveries, but instead relates to causes long before birth. (Some of the most compelling evidence has come to light since Edwards's last cerebral palsy lawsuit, in the mid-1990s; some was publicly known by 1989.) Nor does the book mention the evidence that fear of such lawsuits has spurred doctors to order millions of medically unwarranted Caesarean deliveries in recent decades.

Edwards has said that he took cerebral palsy cases only when he had strong evidence that a botched delivery was to blame. That assertion may be tested in the months ahead. In any event, it was never any secret that the tort system does nothing for the vast majority of babies with cerebral palsy, because their cases don't look like winners to lawyers. A North Carolina state legislator proposed, unsuccessfully, to address this inequity in 1991 by creating a special fund for all such families to share, while limiting malpractice awards. Edwards opposed the bill, according to The New York Times, calling it a baby tax. But a baby tax already exists: the malpractice premiums paid by obstetricians. And Edwards did much to increase those premiums.

None of this is to deny the need for a muscular tort system. But the current system is woefully inefficient at compensating victims, leaving most with little or nothing—because their claims don't appear lucrative enough to lawyers such as Edwards—while making millionaires of the small percentage who win big. And of each dollar that goes into the tort system, only 22 cents is used to compensate economic losses. The rest goes to pain-and-suffering and punitive awards (24 cents), legal costs (33 cents), and insurance overhead (21 cents).

"When people buy products, in effect they are purchasing an insurance policy for subsequent tort-liability payoffs," explains professor W. Kip Viscusi of Harvard Law School. "The real question is whether people would choose to buy that kind of insurance voluntarily. Clearly, people would like to have their basic earnings-loss and medical needs covered. But few, if any, people would buy an insurance lottery ticket that would give them a chance at a jackpot award, since that is not the kind of insurance people value."

The tort system has done a better job of deterring dangerous conduct and making products safer. But it has reached and passed the point of carrying deterrence too far—for example, by forcing doctors who seek to insulate themselves from liability to order tens of billions of dollars in medically unnecessary tests; by driving malpractice premiums so high as to force some doctors to flee obstetrics and other high-risk specialties; by vastly increasing the costs of vaccines and some other vital products; and by making it unsafe for companies to develop products that could benefit pregnant women and other high-risk groups.

Whether the tort reforms proposed by President Bush would make the system better or worse is a subject for another column. But this system needs an overhaul.

It would be unfair to condemn Edwards for taking the system as he found it and playing by its rules. But his apparent opposition so far to any and all serious legal reforms and his deep indebtedness to the trial-lawyer lobby are causes for concern. More important in terms of the larger issues facing the country, Edwards's business-bashing, anti-free-trade, us-against-them campaign rhetoric, unlike John Kerry's, seems sincere. Edwards sounds as if he believes in his bones that behind every misfortune there must be a wealthy villain.

If so, President Bush may not be the only national candidate who sees the world in black-and-white simplicities. And while Bush seems all too wedded to the plutocratic notion that what's good for rich Republicans is good for the country, Edwards seems all too comfortable with the populist myth that what's good for rich trial lawyers is good for those he has called "real people."